AAA Co. merged into BBB Corporation on July 1, 2013. In exchange tor the net assets at fair market value of AAA Co. amounting to P696,450, BBB issued 68,000 common shares at P9 par value with a market price of P12 per share. Out of pocket costs of the combination were as follows: P 35,600 Legal fees for the contract of business combination Audit fee for SEC registration of stock issue 90,000 Printing costs of stock certificates 14,500 Broker's fee 23,600 Accountant's fee for pre-acquisition audit 80,000 Other direct cost of acquisition 75,000 General and allocated expense 43,000 Listing fees in issuing shares 36,000 AAA will pay an additional cash consideration of P455,000 in the event that BBB's net income will be equal or greater than P950,000 for the period ended December 31, 2013. At acquisition date, there is a high probability of reaching the target net income and the fair value of the additional consideration was determined to be P195,000. Actual net income for the period ended December 31, 2013 amounted to P1,250,000. The additional cash consideration was paid. What is the amount of goodwill to be recognized in the statement of financial position as of December 31, 2013? What is the amount of expenses to be recognized in the statement of comprehensive income for the year ended December 31, 2013?
AAA Co. merged into BBB Corporation on July 1, 2013. In exchange tor the net assets at fair market value of AAA Co. amounting to P696,450, BBB issued 68,000 common shares at P9 par value with a market price of P12 per share. Out of pocket costs of the combination were as follows: P 35,600 Legal fees for the contract of business combination Audit fee for SEC registration of stock issue 90,000 Printing costs of stock certificates 14,500 Broker's fee 23,600 Accountant's fee for pre-acquisition audit 80,000 Other direct cost of acquisition 75,000 General and allocated expense 43,000 Listing fees in issuing shares 36,000 AAA will pay an additional cash consideration of P455,000 in the event that BBB's net income will be equal or greater than P950,000 for the period ended December 31, 2013. At acquisition date, there is a high probability of reaching the target net income and the fair value of the additional consideration was determined to be P195,000. Actual net income for the period ended December 31, 2013 amounted to P1,250,000. The additional cash consideration was paid. What is the amount of goodwill to be recognized in the statement of financial position as of December 31, 2013? What is the amount of expenses to be recognized in the statement of comprehensive income for the year ended December 31, 2013?
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 28E
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